The Obama Jobs "Recovery"

Let us update the extent of the Obama jobs "recovery."  The most important datum informing us of the health of the economy to provide Americans a means to earn a living is the employment to population ratio.  When many people work, the economy is more likely to hum along fine and operate to raise our standard of living.  When fewer people work, there are more demands for high government extractions of wealth from the productive private sector, the standard of living stagnates or worse, and the people become more dependent upon the Big Government parasite.  So here is the non-seasonally adjusted data on the employment to population percentage according to the Bureau of Labor Statistics:

The fraction of the American non-institutionalized population over 16 which is employed has risen somewhat through April 2014 from a downward drop in the latter half of 2013.  However, this all-critical employment to population ratio is still well below the already very low ratio when he first took the oath of office of the presidency in January 2009.  More critically for Americans, the usual pattern of a recovery from recession within a couple of years to return to a similar employment to population ratio as that prior to the recession is in no way evident.  It is far more accurate to call this employment stagnation in the depths of a never-ending depression than to call this a recovery.

Yet many are shouting harrahs because the so-called unemployment rate dropped in April, even as 800,000 people left the workforce.  Many Americans are in the depth of despair at finding a decent job.  The reports are that most of the jobs that were created in April were relatively low-paying and unskilled jobs.  This is hardly surprising to me given the assertively anti-private sector policies of the Obama Oligarchy Gang of his dictatorial, individual rights trampling, Constitution ignoring, anti-energy, anti-business, micromanaging, lawless, and self-ownership denying regime.  In such a chaotic environment, the private sector does not invest in new business ventures and does not hire.  Obama's claims that money spent by government, which it removes from the private sector, is an investment has been tested many times throughout history.  That experiment always fails to back the statist theory and has failed once again under the Obama Regime.

This remains the never-ending Great Socialist Recession.  Although, given its duration and the degree of human misery it has caused, it is becoming more and more nearly correct to upgrade this condition to the Great Socialist Depression of the 21st Century.  The low employment, the huge transfer of wealth from the private to the government sector, the lawlessness of the government, and the rate of implementation of new socialist programs is very akin to the Great Depression of the 20th Century.  This is what you get when you put government in the hands of the Progressive Elitists.  For all their pretense to know better than most Americans how their lives should by micro-managed by this Progressive Elitist clique, they always manage to mess our society up royally.

We Americans do much better when we insist on controlling our own lives and living them in accordance with our self-chosen values.  Our standard of living is highly dependent upon our rejection of the Progressive Elitist claim that we did not make that.  It is each of us as an individual who must make our own lives and must honor and protect the right of every other individual to do the same.  We must fight off the usurpation of power over our lives by a power-lusting Progressive Elitist cabal.  That cabal refuses to recognize our highly individualistic natures, rich in complexity and highly differentiated.  It refuses to recognize our self-ownership as ObamaCare especially makes clear.  It refuses to recognize our ability to use reason to improve our own lives while exercising our individual rights to life, liberty, property, and the pursuit of our own happiness.  As the Declaration of Independence asserts the protection of such broad individual rights as the sole legitimate justification for a highly limited government and thereby defines the American Principle, the Progressive Elitist movement is profoundly anti-American.

Either - Or: Big Government or Children

Big Government is often partly justified as necessary to provide services to children, but rarely do people think about the effect that Big Government has on whether people decide to have and raise children at all.  The USDA estimated in 2013 that a child born in 2011 to a US couple with a middle income will cost the parents $241,080 to raise to the age of 18.  This does not even include any costs for a college education or a failure to launch with 36% of 18 -31 year olds living in their parents homes in 2012.  Both of those costs have been increasing rapidly in recent years, while the median inflation-adjusted family income has fallen by $4,000 a year since 2000.

Now, we know that fertility rates are sensitive to a couples' economic security and their available resources.  Fertility rates dropped sharply in the US during the Great Depression.  Fertility rates dropped due to the back to back 1958 and 1960-1961 recessions.  They dropped substantially during the economic malaise of the late Nixon, the Ford, and the Carter years.  The fertility rate has dropped since 2008 as well.  We know that recent efforts of France and Sweden to decrease the cost of raising children have resulted in an increase in the fertility rates.  In December 2011, the Pew Research Center found that 22% of 18 -34 year olds said they were delaying having children for economic reasons.

So what do you think the effect of the great increase in government spending relative to the size of the economy has been on the fertility rate given that the increased spending came at the expense of transferring wealth from the private sector that pays child-raising expenses to the government sector?  The plot of the sum of federal, state, and local government spending from 1950 to 2013 as a percentage of the Gross Domestic Product (GDP) is shown below:

In 1950, the birthrate per 1000 people was 24.1, in 1970 it was 18.4/1000 people, in 1990 it was 16.7/ 1000 people, and in 2009 it was 13.8/1000 Americans.  Total government spending in 1970 was much higher than in 1950, then again increased greatly by 1990 and still more in 2009.  The fertility rate fell substantially with each of those jumps in total government spending.  Now, I am not claiming this is the only effect on fertility rates, but it is a very logical one and the evidence is that it is a substantial effect.

But, the median household income in 2012 according to the Bureau of the Census was $51,371 a year.  At a 38% total tax on this income, the governments are taking $351,378 from this household over the course of 18 years.  To be sure, the family with the median income is paying less in taxes than the average tax rate, but this is probably made up by increased costs they pay for goods and services as tax costs are transferred to them and inflation caused by the government deficits over the years.  Supporting Big Government is the equivalent of raising about 1.5 children for 18 years.  This has to affect the calculation on how many children to have.

Big Government also saps the ability of the private sector to increase worker productivity by reducing private investment in productive equipment, new facilities, and worker training.  It reduces the number of new start-up companies.  The result is an economy which instead of growing in real per capita terms of 4% per year, stagnates to zero growth in real per capita terms as we have seen for the last 5 years.  The governments largely caused the recession and have kept the private sector from growing us out of the recession.  It helps tremendously when a married couple can have confidence that their income will exceed an average per capita increase of 4% compounded over 20 years as they add their own increasing experience and skills by the time the child they might choose to have is in the middle of his college education.  It is much, much easier to undertake having a child with economic growth than if there is no growth due to government-induced stagnation.

In 2012, the average American woman was giving birth to 1.88 children in her lifetime.  This is well below the replacement rate of 2.1 children per woman.  This means that minus immigration into the US, the population would be decreasing over the long run at this birthrate.  That means a lowered number of future productive workers in the US and an increasing number of retired people and people on major entitlements per worker in the US.  This means very wrenching problems of sustainability for the many Big Government entitlement programs.

It also means that many people who otherwise would be enjoying raising children cannot do so because so much of their income is being diverted to Big Government.  That impact on families is not spread evenly across the country.  Couples earning more than $105,360 in the urban northeastern US will spend $446,100 per child.  This is also an area of the country with a particularly high cost of state and local governments.  Imagine the effect on the decision whether to have children or not?  On the other hand, families earning less than $61,590 per year in rural areas will spend less than $143,160 on the first 18 years of raising a child.  These rural areas usually have a lower tax expense.  All of these factors make for interesting calculations on whether to become parents.

Anna and I raised three children and sent one to college for 4.5 years, one to college for 4 years, and one to college for 1.5 years, while living in the Northeast.  It was a hugely expensive proposition which many people will not attempt.

Though many Malthusians are very happy to see low birthrates, the rising population of the world has been consistently combined with an increased standard of living around the world.  The USA is a particularly sparsely settled land, most of which has been reverting to wild lands as our agricultural prowess has increased so that less land was needed for farmland.  The foolish government mandate requiring ethanol additions to gasoline has recently interfered with that trend toward using less and less land for farming.  Of course, the trend of less and less land for food production has continued.  The innovations of the developed countries have also led to fewer and fewer problems with polluted air and water.  What we are losing with low birthrates is many keen, productive minds which would otherwise enrich our lives and advance civilization.

The Clueless Federal Reserve in 2008

A meeting of the Federal Open Market Committee of the Federal Reserve on 29 - 30 January 2008 two months after the Great Socialist Recession began in early December 2007 was pretty sure that

• The USA would avoid recession.
• Export growth in 2008 and 2009 would be at a rate of 7.25% both years.
• Reductions in the Federal Reserve interest rates would return full employment by 2010.

This group that included Bernanke, Geithner, Yellen, and many other top Federal Reserve leaders was perfectly clueless.  As we all know, the USA not only did not avoid recession, that recession was two months old at that time and would continue even by the government's self-aggrandizing determination through June 2009.

US exports decreased sharply in 2008 and at the end of 2009 they were still below 2007 levels.  Finally, despite drastic cuts to essentially zero in the Federal Reserve interest rate, we have not come close to a recovery to full employment as of January 2014, let alone by 2010.

Federal regulatory agencies and commissions rarely do know what they are doing.  This clueless state is the general state of the Government bureaucracy and of the independent organizations it sets up.

Still No Jobs Recovery in the Great Socialist Recession

The January 2014 jobs report is out from the BLS.  Ignoring the unemployment rate, which is meaningless given the many people who have given up on finding a job in this never-ending Great Socialist Recession, the number to focus on is the employment to population ratio.  Let us examine the history of the employment to population ratio for Januaries going back to January 2007, before the sharp increase in energy prices and the subsequent financial failures.

Note that the lowest employment to population percentage was 57.6% in January 2011, prior to which our government was telling us that the employment situation was well into recovery from the recession which they had declared over much earlier than that in June 2009.  Now, in January 2014, the employment percentage is a miserly 58.1% according to the BLS.  In fact, it is really 58.0% on the same basis that the earlier employment numbers are given.  In March 2013, the BLS recategorized some workers who work in the home from the farm sector to the non-farm sector.  That re-categorization caused an artificial increase in the employment to population ratio, giving the government a desperately needed apparent increase in jobs.

So let us examine how far the jobs recovery has occurred in this never-ending recession.  The present 58.0% is an employment to population ratio which is only 0.4% higher than that of the worst January of the entire recession.  Since the drop in the employment ratio from January 2007 prior to the recession to January 2011 at the depth of the jobs recession was 5.0%, the extent of a jobs recovery is

0.4% / 5.0% = 0.08.

According to the National Bureau of Economic Research, the recession began in December 2007 and ended in June 2009.  In the 4.5 years since the government says the recession ended, the jobs recovery has managed only to recover 0.08 of the lost employment to population ratio.  This is pathetic.  It is a terrible misrepresentation to say we are in a jobs recovery.  We are in a deep jobs depression and for all intents and purposes the jobs situation has been stuck in a deep pit.  Perhaps a pit with a slightly sloping bottom, but so what!  Those who claim an 8% jobs recovery over four and a half years is a recovery should be scorned.  They should be laughed out of town.

The Progressive Elitists surrounding Obama and backing his anti-business policies look down upon most Americans as people who are unable to choose their own values and manage their own lives without strong controls placed on them by these same Progressive Elitists.  They are sure they know better than most of us Americans how to manage the economy and all aspects of our need to earn a living.  They hold us in scorn and look down on us in the worst possible way.  Some of them even think the recession and such problems as high energy prices are a good thing, because of their exaggerated belief that mankind's standard of living comes at the expense of the environment.

Most of us are prepared to have the results of our work judged by those we work with, work for, sell to, and compete with.  Let us hold them to a standard that measures them by the results they achieve.  If they tout their success with a 8% jobs recovery and expect us to ignore the 92% of the recovery denied to us and the private sector due to their interference, we should turn the scorn table on them.  We must evaluate them as catastrophic failures in governance.  We must see that big government cannot produce jobs as they claimed it could.  We must see the government must get out of the way or it will keep us from creating the jobs we have proven over and over that we can create for ourselves.

The Progressive Elitists and Obama keep saying "We did not build that."  Well, we used to and we will again, if only we will get them out of our way.  Throw the Bums Out!

Continued References to Economic Recovery Are Weird

Fewer Americans were employed in December 2013 than were employed in either December 2006 or December 2007.  The percentage of non-institutionalized adults employed both in December 2012 and December 2013 was far lower than in December 2006 and December 2007.

 Over and over we hear that the economy is recovering, albeit slowly.  We have heard this throughout 2012 and 2013.  But note that the percentage of working age Americans employed in December 2011, 2012, and 2013 has been stuck at 58.6%.  This is 4.8% below the employment percentage of December 2006, which was just before the sudden cost of oil increase in early 2007 and before the subsequent financial crisis in 2008.

This is an incredible degree of employment stagnation.  Yes, 58.6% is above the low 58.2% of December 2009, but the 0.4% increase relative to that low point is only a fraction of the total December 2009 loss relative to December 2006 of 0.4% / 5.2% = 0.077.  In other words, for all intents and purposes, from 2009 through 2013 the employment situation has been essentially unchanged and awful.

We need to have 11.843 million more jobs to have the same percentage employment we had in December 2006.  Because of the big government policies of George W. Bush prior to Obama, that December 2006 employment percentage was already lower than it had been in December 1999.  Our jobs stagnation problem actually began at the start of this century.

Apparently a government jobs program, consisting of

• bailouts, 
• stimulus programs, 
• Food Stamp increases,
• Social Security Disability increases,
• Extended Unemployment Benefits, 
• ObamaCare, 
• Dodd-Frank and other financial regulations,
• Tax increases,
• Increased fossil fuel sourced energy costs (recently moderated by shale oil and gas increased production on private lands, while extensive federal land and off-shore oil and gas were denied development), and
• Subsidized so-called green energy,

has not been very effective in increasing employment.

But then a program to take people out of the private sector workforce, to transfer money from the private sector to the government sector, and to limit the options of the private sector's entrepreneurs and consumers could have no other outcome.  It is not as though this sort of program has not been tried before and been found to fail disastrously.  But those who believe in the efficacy of big government will not learn from history.

As a result, we have had at least 5 years of a jobs depression.  Given Obama's wrongheadedness and pigheadedness, we are likely to see this continue for at least another 4 years.  Four years being 3 more years of Obama and one year for a more rational and less abusive President to return control of the economy to the private sector.

If the Great Recession has Ended, Why Are Fewer Prime Working Age Men Employed?

We are constantly being told that the economy is getting better, albeit slowly.  I have pointed out many times that the employment participation rate has not improved throughout 2010, 2011, 2012, or 2013.  I have pointed out many times that the real, per capita GDP has not grown, though this is a far better measure of our real condition than the GDP or that fake real GDP according to the government.

Another of many indicators that there is no improvement is the terrible plight of employment among men of the prime working ages 25 -54 years old.  Unemployment among men of these ages has continued to climb at rates in excess of population growth since the government declared recession supposedly ended.

It sure is difficult for Obama and the government to call a spade a spade.  This is some recovery when 12% of men of the prime working ages are unemployed!

Still no Jobs Recovery

In September 2012, the employment to working age population percentage was a low 58.8%.

In September 2013, the employment to working age population percentage is a low 58.8%.

These are the non-seasonally adjusted Household Survey numbers from the BLS.

This is perfect stagnation, continuing the general stagnation in employment going back to 2010 in this never-ending Great Socialist Recession.  This will continue to be the story at least until some time in 2017, assuming that a Democrat is not elected into the presidency to replace Obama.  Even then, we have to hope his replacement will actually begin a program to reign in the growth of government and end many of the anti-business, anti-energy, and anti-medical care policies now in place.

Small Employment Improvement, But Lost Recession Jobs Still Not Replaced

The missing job situation in this recession and generally as a result of government malfeasance since 1990 is shown in the plot below:

The number of missing jobs is falling, though it does this every year at the this time in these non-seasonally adjusted numbers derived from the household survey data of the Bureau of Labor Statistics.  If we compare the number of missing jobs relative to January 2000, for the last several July months, we find that the number is slightly lower at 20.747 million now than it was in July 2012 and July 2011, but it is slightly higher than in July 2010.  This leaves us far short of replacing the jobs lost in the never-ending Great Socialist Recession, so long owned and perpetuated by Obama.  Job growth is taking care of population growth, but it is not replacing the recession lost jobs.  This is truly a stagnant economy with no increase in our standard of living in sight.

Let us examine more of the employment numbers:

The number of employed people has increased recently and the number of missing jobs has improved as the percentage of employed work age people increased to 59.05%.  This is higher than the percent of employed people which was stuck in the 58 - 59% range for so long in this recession.  The real unemployment rate long stuck in the 13%-plus range is now down to 12.5%.

While many of the new jobs most recently may have been part-time jobs as reported, the average work week is still 34.4 hours, compared to 34.6 hours a week in July 2006 and July 2007.  This is only a 0.6% reduction in work hours compared to the two years prior to the recession. The effect of ObamaCare in converting full time jobs into part time jobs is large on current hiring, but it will have to go on for some time before the average work week is substantially shortened.  I expect that the effect will continue to convert full-time work into part-time work and will in time have a big impact on the average work week.

Given the number of jobs added from June to July in the seasonally unadjusted household survey, it will take 5.4 years to employ the same fraction of the population that was employed in December 2007 if the population increases at 1% a year.  This is a very optimistic projection based on a particularly large monthly increase of employed people of 272,000 and given that the economy is slowing once again.  Even with this unrealistic and optimistic projection, this Great Socialist Recession unemployment crisis will have lasted 11 years from its start in December 2007.  It will outlast Obama.

6 Aug 2013 Addition:

Since the Great Socialist Recession began in December 2007, the number of Americans 16 and older has increased by 13.889 million according to the BLS household survey data.  Yet, 1.988 million fewer Americans are employed now than in December 2007.  Obama's recovery claims are a complete distortion of reality. Yes, jobs are being added, but the rate of jobs added is lower than it was from 1993 to 2000, despite the opportunity to recover from a deep recession and the normal opportunities to employ a growing population of working age people.  Obama's socialist policies are doing exactly what such policies always do -- they are putting people out of work and lowering their standard of living.

Obama Year 5 Economic Recovery Collapse

The 22 July 2013 Wall St. Journal headlined "Growth Outlook Stuck in Neutral."  It reports how slightly rosier economic predictions earlier in the year are proving to be too optimistic.  It notes that the expected Second Quarter growth has been downgraded to a mere 1.5%, down from an expectation one month earlier that it would grow at an annualized rate of 1.9%.  Recall, as I often point out, that since population growth is about 1% a year, real per capita GDP growth is about 1% less than the real GDP growth.  Consequently, the Second Quarter growth projection is actually only 0.5% in terms of an improved standard of living and in terms of serving employers to think about hiring.  Of course employers are mostly converting people to part time jobs thanks to ObamaCare, so most new hires are a downgrade from a full-time job somewhere to a part time job somewhere else.  This in turn has caused a sudden decrease in retail spending to only 0.4% in June, which is really -0.6% when corrected for population growth.  Worries are rising that the second half of 2013 will not live up to earlier expectations also.

Once again, the expectations of the Obama administration, or at least its and its media running dogs public announcements, have proven wrong on predictions of an improving economy.  In fact, Obama is wrong for the fifth time out of five such claims.  The man and his supporters are remarkably consistent in being wrong.  This, of course, comes from being remarkably wrongheaded in their aims and in their understanding of the economy.  Strangely enough, it proves impractical to thwart the economic rights of individual entrepreneurs.  Who could ever have imagined that!

The recoveries of 2009, 2010, 2011, 2012, and now of 2013 have all collapsed.  But Americans, just keep going on about your business and keep that faith in Hope and Change, and love that Obama smile.  Keep moving on.  There is nothing to see here.

Congresswoman Donna Edwards Replies

Periodically, I send my Congressional Representative or my two Senators notes expressing my abhorrence about something or other they are about to do to suppress the rights of the individual.  Usually, the response indicates no appreciation for my note in the form of acknowledging the legitimacy of my points.  But, most of the time, it at least broadly indicates something about what I was addressing.  Sometimes they respond as though I agreed with them, as all right-thinking Progressive Elitists, or Aristocrats, do in Maryland, where the Free State of old has long been a sad, poorly used skeleton.  They simply cannot conceive that a decently written note could come from someone who opposes the Nanny State and their Progressive Aristocracy dedication to the victims of a society that has made almost everyone rich and free by the low standards of most of the world.  Today, I received a particularly aggravating non-response from Congresswoman Donna Edwards.  My reply is given below:

Donna Edwards,

I contacted you last year when I was still in your gerrymandered district.  I am not sure about what and I cannot find a hint about what from your response.  Now I am in the most incredibly gerrymandered district of John Sarbanes.
Of course, neither of you are in the least interested in my one, dominant need for the freedom to exercise my equal, sovereign individual rights to life, liberty, property, the ownership of my own body, mind, and labor, and for the pursuit of my own personal happiness.  You are both enthusiastic supporters of tyrannical, rights-violating, and illegitimate government.  If you think your government is legitimate, re-read the Declaration of Independence.  You might also observe that the reason for a Constitution was for the People to mandate a government of highly limited and precisely enumerated powers which would operate as a legitimate government as defined by the Declaration of Independence.

I am a small business owner and operator who can no longer provide as many jobs as I could before the government-induced recession, from which my business is still suffering.  Thank you for the big government model of special interest controls which has brought about a total stagnation of the real per capita private sector portion of GDP.  It is so clever of you to understate inflation, which acts as a hidden tax on all of us Americans.  It is a neat trick to take any increase in GDP, even government spending on your favored special interests and campaign donors with dummy green energy companies, and attribute that to the health of the economy.  It is especially neat that we are not supposed to be aware of the fact that what matters is the size of the per capita private sector, hence a stagnant economy is one that grows in real value at the same rate as the population is growing.  The number of missing jobs has remained constant over the last 3 years (see http://objectivistindividualist.blogspot.com/2013/03/obama-jobs-recovery-in-99-years.html).  With the booming potential of our fossil fuel supplies and American innovative proficiency, it is a really amazing feat that big government has been able to totally stagnant our economy.  Industry-killing regulations, ever increasing taxes, and many unfunded mandated expenses imposed on the private sector are your stock-in-trade.

Finally, I will always remember that you voted for ObamaCare, really ObamaUncaringTax according to our crazy Supreme Court.  That unread bill is an attempt to steal the very ownership of my body from me.  It expects me to sign over my body by filling in an IRS tax form that acknowledges government ownership of my body.  I am supposed to bow and scrape and prove that I have submitted to the government directive on how I will maintain and support my body.  The draconian 5-year prison sentence you voted for, is supposed to cow me into slavery as a numbered body owned by the government.  Nothing about my individual nature is of interest to the government that aims to take control.  To be sure, you hope to simply steal money from me or that I will submit instead of revealing your tyranny so dramatically as to be hauled off to prison by tyrannical government thugs.  The theft of hard-earned income or the draconian prison sentence are supposed to prevent such public displays of principled stands for liberty.  As the Congress, President, and the Supreme Court have abandoned the Constitution and the concept of equal, inalienable individual rights, so are we the People supposed to abandon them.  I will not do so.

Perhaps that is why you are buying up so many assault weapons, as you call them, and so many rounds of ammunition for domestic government agencies.  American government has undergone quite an amazing transformation toward tyranny.

An American Dedicated to Liberty,

Charles R. Anderson, Ph.D.
Lab: (410) 740-8562
Mobile: (301) 830-1886
Home: (301) 384-3253
http://www.AndersonMaterials.com
http://AndersonMaterials.blogspot.com
http://ObjectivistIndividualist.blogspot.com/

Obama Jobs Recovery in 99 Years

Despite all of the whooping and hollering about the BLS February Unemployment Report and the claims of job recovery, there is no evidence of a meaningful jobs recovery.  None.  Absolutely none, unless your time horizon is 99 years and you have an unjustified belief that Obama will not continue to purposefully damage the economy.  The real unemployment rate is 13.92% in February, which is only down by 0.10% since February of 2012 and 0.41% since February of 2011.  To return to the unemployment of January 2000, before the government started extracting more and more out of the private sector on a wild spending spree, will take 99 years at the rate of improvement of the last year and 48 years at the rate of improvement of the last two years.  Note that the rate of improvement is actually slowing down.  The molasses once flowing at a typical late December rate is now flowing at a late January rate.

Because of the huge numbers of people who have left the labor force since January 2000 and especially since this recession began, the usual unemployment rate is quite meaningless.  It is presently 8.08%, though it is the seasonally adjusted rate which is usually given.  The BLS tells us that is 7.7% now.  The Wall St. Journal gives that nonsense the headline treatment.  But in January 2000, 64.49% of the working age non-institutionalized population over 16 was employed.  In January 2013, only 57.88% were employed.  Jobs have been created over the last four years despite Obama messing the economy up, but the population has also grown.  As a result, the number of missing jobs needed to return employment to 64.47% of the working age population for any month of the last year when compared to that same month one, two, three, or four years earlier is unchanged.  The missing job plot is shown below:

Comparing February 2013 with February 2010 or February 2012, we see that the number of missing jobs is very slightly higher.  It is very slightly lower compared to February 2011.  But overall, it is remarkably constant.  About the only month that is exceptional is October 2012, which is slightly better than any of the prior three October missing jobs numbers.  This might be due to an intentional effort on the part of the government to improve the job situation immediately before the 2012 election in November.

The complete job situation is spelled out in the table below:

It is interesting to examine the BLS chart on the number of non-farm employed persons.

Despite the passage of 5 years since the employment peak before the recession, we are not even close to having as many people employed now as then.  What is worse, the working age population has grown by about 11.2 million people since the peak in employment.  Many more people would be employed now than were in December 2007 were it not for a terrible combination of governmental incompetence and a willful determination to harm businesses.  Government has to work very hard to create a situation as effective in thwarting the desire and the ability of American businessmen to grow their businesses and the economy.  The federal government alone is extracting 25% of the GDP for its spending, which is up from an excessive 20% under Bush and Clinton.  In addition, Obama has laid many new operating expenses upon businesses with mandates, new expensive regulations, higher taxes, and ObamaCare.  These and his constant anti-business, collectivist rhetoric have made it unreasonable for many businesses to invest in added production and in hiring new employees.

It is very obvious that Obama and his backers do not care about the welfare of the American people.  When many cannot find decent jobs, they become more vulnerable to long-term unemployment, to under-employment, to addictions and health problems, and to lacking the means to retire in their old age.  The con artist is effective in pretending to care about some Americans, but you have to look at the result of his actions.  It is important not to allow him to misdirect our attention with his magic tricks.

There is at least one good piece of employment news as a result of the Obama Depression.  The number of government workers across the country has been falling.  That is fewer people creating bollixing laws and regulations and demanding very high salaries, rich working benefits, and unbelievable retirement benefits.  The two sharp upward spikes are due to the hiring of census workers for the 2000 and 2010 censuses.

In looking this data up, I came across myriad articles construing this data as that for only federal employees.  Therefore there were many claims that Obama was decreasing the size of the federal government or of public employment.  These included an article in Forbes magazine, a claim by Paul Krugman, and one by Media Matters.  Unbelievably, they either thought that there were 22 million federal employees or they were trying to give Obama credit for restraining the growth of local and state government employment in a most deceptive way.  I shudder to think how much damage 22 million federal employees would do.

The federal government actually takes years to release the information on the number of its employees.  It does not want us to know.  But I did find that in 2011, the total number of federal employees, including the armed forces, was 4.403 million, of whom about 2.76 million were civilian employees.  It is perfectly clear that the above charted data from the BLS surveys is for all government employees, most of whom are either local or state government employees.  The reduction in government workers seen here is due to the reduction of local and state employees as their tax revenues fell off.  Unlike the federal government, they cannot simply print money to pay their employees.

Obama's Job Destruction Plan Illustrated

We have long been seeing updates of the graph that Obama and his henchmen used to illustrate the effect of their jobs creation plan with comparison to the jobs recovery with no such plan.  The effect of his distributing huge sums of printed and borrowed money among his campaign contributors and such of his constituents as he expected had purchasable votes is clearly shown in this most recent update of that graph.  The actual unemployment (actually understated) through the recession is shown with the red dots and this far exceeds the anticipated unemployment rate if Obama did nothing.

Surely we should assume that the difference between the original projected unemployment rate and the actual unemployment rate is the result of Obama's policies.  In other words, instead of improving the jobs situation, those policies clearly worsened it during this Great Socialist Recession.  They worsened it far worse than this plot implies too, since the actual unemployment rate is really much higher than the stated rate as I have many times pointed out.  This is due to the many people who have given up hope of finding employment and stopped looking for it.  It is also due to the many people who have become comfortable on food stamps, extended unemployment benefits, and on Social Security disability payments under Obama's inducements to do so.

Obama's New Normal Part-Time Economy

Average hours worked for all non-farm private employees has been stuck at 34.4 hours for 4 months now.  The average hours for non-farm private production and non-supervisory employees dropped 0.1 hours in October to 33.6 hours.

Real per capita GDP is $50,166 through the third quarter, but it would be $55,932 if long-term historical trends had not been replaced by the Obama "new normal."  This loss of $5,766 per person is sorely felt.  High unemployment and all-too-common part-time employment has kept the economy from expanding at historic rates.

As Mike Shedlock has noted, the recovery of hours worked following the period of nominal GDP contraction shown in the light blue region of the plot below has stalled out.  The earlier rate of increase was substandard following a recession.  For many months now, Obama's "new normal" has settled in.  The question is, are Americans ready to settle for the Obama "new normal."

There is no reason at all to do so.  The U.S. economy is more than ready to recover, if only Washington will stop doing everything it can to prevent business success.  One of the big factors is the pressure that ObamaCare, really ObamaUncaringTax, is putting on businesses to convert full-time positions into part-time positions.  ObamaCare defines full-time employment for the purposes of requiring health insurance coverage or the payment of a penalty by the business as a mere 30 hours of work a week.  As a result, many businesses are putting a limit of 25 to 28 hours a week on their employees.  The tax assessment on employees requires a look-back period of 3 months to a year, to be selected as an option by the employer.  Consequently, companies have had to ensure that at the latest, many of their employees had less than 30-hour workweeks for more than the last 3 months of this year.  The Obama "new normal" is a 25-hour workweek for many Americans.

Historically Slow Jobs Recovery Trucks On Due to Determined Industry

The usually quoted unemployment rate went up from 7.8% to 7.9%, but this always quoted number is fairly meaningless in a very long recession, nearly never-ending recession. The unemployment rate went up because a few more people decided there might be hope of finding a job, so they renewed their effort to find a job.

American industry forced the economy slowly forward in October 2012 despite the full application of brakes by Obama and his henchmen.  Industry added 973,000 jobs in October, perhaps in anticipation of a win by Romney on 6 November.  If it was not that, then there are a lot of lunatics in American business, but history suggests otherwise.  Government added 20,000 jobs, despite all of Obama's moaning that government has been hurt most by the recession.  Government had hired madly in September.

Unincorporated self-employment in non-agricultural jobs fell by 172,000.  The decrease in unincorporated self-employed is almost certainly further indication that the huge rise in unincorporated self-employment over the last couple of years was an act of desperation on the part of Americans who could not find jobs otherwise.  Any self-respecting American creates his own job when he cannot get a job from someone else.  But in a bad, Obama economy with no capital to invest in your business, being self-employed is really rough.  Now that industry is hiring, these suffering Americans are shifting to the better jobs bigger companies can offer them.

Let us examine the household survey employment numbers:

The number of missing jobs is falling at a very slow rate.  In October 2010, the percentage of missing jobs was 13.73% and this October is down to 12.53%, or 1.20% over two years.  This is
an average rate of missing jobs recovery by the economy as abused by Obama of 0.60% a year.  At this rate, it will take us more than 14 more years to lower the missing job rate back to the 4.04% rate of January 2000.  Obama's new normal economy is one that takes a total of 18 years to recover from a recession.  His braked economy is actually mired in a GREAT DEPRESSION, that being the only historical precedent for an 18 year recovery period in American history.

One of Obama's favorite campaign claims is that he has created, note the hubris, 5,000,000 jobs.  Once again, employers did not do it.  No, the government did.  At least if it was good.  If it was bad, then businessmen did it.  This is a matter of big government definition.

Actually, there are 144,039,000 employed Americans now and there were 143,338,000 million employed in George W. Bush's last full month as President in December 2008.  So, there are only 701,000 more Americans employed now than at the start of the Obama presidency. This is only 14% of Obama's claim, but as he says, he cannot do 7th grade math.

Meanwhile there are 8,948,000 more working age civilians available for work now than there were in Bush's last month.  The added 701,000 jobs distributed among the 8,948,000 new potential workers is enough to provide a job for 7.83% of them.  Pathetic.  That is an employment rate which is lower even than Obama's super-high unemployment rate overall is.  But this is the new Obama Normal.

Obama Still Killing Jobs, Atlas is not Hiring

The employment statistics released by the Bureau of Labor Statistics for August 2012 show that Obama is still killing jobs and causing Americans to lose hope and drop out of the labor force.  The household survey employment statistics without seasonal adjustments with comparisons to various months going back to January 2000 are shown in the following table:

As usual, the number of missing jobs is calculated assuming that as many people now would want jobs as did in January 2000, when good jobs were plentiful, if government policies were not reducing employment.  The population of 16 and older non-institutionalized people grew by 212,000 people in August.  It is expected that 67.49% of these new potential workers would want jobs if good jobs were available.  This means to keep up with the population growth, 143,079 new jobs needed to be added in August compared to July.  Instead, 568,000 fewer people were employed in August.  This is a disaster, yet the normal unemployment rate went down!  As I have pointed out over the last two and a half years, this number is virtually meaningless when the jobs situation has long been awful.  What we should do to look for any possible progress in creating jobs is compare the same month employment and better yet missing jobs numbers for the same month a year ago and two years ago, since these numbers are not seasonally adjusted.  Much like the unemployment percentage, long recessions/depressions cause the seasonal adjustments to become dubious.  The missing jobs numbers are plotted below.

We find that in August 2012, there are 270,000 more missing jobs now than there were one year ago in August 2011.  Comparing to August 2010, the missing jobs number has increased even more to 1,050,000 more missing jobs.  According to Obama and Biden this is turning the corner on job creation.  Strangely, they portray this as a good thing justifying their being re-elected.  I suspect they live in an alternative universe in which everything bad is thought to be good.  That would explain why they are such committed socialists.

So, the Obama/Democrat jobs policies increased the actual number of missing jobs by more than 1 million over the last two years of what they call jobs recovery.  The real unemployment rate is 13.3%, rather than the misleading 8.1% they are claiming.  They love to claim that they have created jobs every month for many months, but do not point out that with a growing population, jobs have to be created simply to tread water.  As we see in comparing the new August data with the prior two year August data sets, they are not treading water, but drowning.

In August 2011, white people had an unemployment rate of 7.9%, which has now dropped to 7.2%.  But, this is because the labor force participation rate for whites fell from 64.8% to 64.0%, not because relatively more whites are employed.  The Hispanic labor force participation rate is higher than that for whites and fell by less from August 2011 to August 2012, from 66.7% to 66.1%.  Their unemployment rate fell from 11.1% to 10.1%, again substantially because the participation rate fell.  Black unemployment fell in the year from 17.0% to 14.5% and their low participation rate fell the least from 62.0% to 61.7%.  Blacks are the only group that is better off now than they were in August 2011, though their unemployment rates are still much the higher compared to those of Hispanics and whites.

The following employment to population ratio chart is another way to see the essential stagnation of the jobs recovery over the last couple of years despite the claims by this most deception administration of a jobs recovery.  This shows that this ratio has been flat at a very low rate since at least October of 2009.  The otherworldly claims of a job recovery by the Obama administration are completely and utterly false and maliciously misleading.  We see that the dot.com recession led to a decrease in the jobs to population ratio which continued until mid-2003, followed by a slow and partial recovery that ended at the start of 2007.  The government fueled and even required sub-prime mortgage collapse was finally arrested about October 2009, but there has been jobs stagnation since.  We are now very close to a three-year period of jobs stagnation under Obama on the heels of a deep recession.

This is hardly surprising given Obama's determined efforts to make business less profitable and more risky, not to mention his efforts to make businessmen look dishonorable.  Well, businessmen decided they would not take this nonsense and they have been on a serious slowdown strike since.  Atlas has at least removed the weighty world from his shoulders and ceased to carry it up the hill of progress.  Atlas has Shrugged, even if he was too responsible to simply drop the world.   For now, he is biding his time in hopes that Obama will be given his walking papers in the November election.  If Obama is removed, Atlas will put the world back on his shoulder and move our economy forward again, as the American Atlas has for decades and even centuries.  If Obama is re-elected, stagnation will continue and our economy will soon be unable to support the growing weight of Medicare, Medicaid, ObamaUncaringTax, Social Security, and the payment of interest on the debt.  Big government will be doomed to collapse.

Government Centrally Planned Economy Continues to Kill Job Recovery

The July 2012 Bureau of Labor Statistics unemployment report of the Household Survey without any seasonal correction of data, revealed a loss of 76,000 jobs in July compared to June.  This was rarely reported in the mainstream media.  The nominal, though rather meaningless, unemployment rate went up from 8.43% to 8.56%.  The percentage of the population with jobs dropped to 58.81% from 58.89% in June.  The headline statistic reported by the mainstream media was that 163,000 jobs were added in July.  This was based on seasonally adjusted data from the Establishment report, but there are problems with the seasonal adjustments in this unprecedented recession and there are a record number of self-employed people these days since they cannot find jobs otherwise.  Many of those self-employed people decided in July that they were not really effectively employed any longer.  They had tried self-employment in desperation and failed in the uphill struggle with the Obama economy.  To take the fate of these people into account, we need to examine the Household Survey data, as I have been doing all along in this unprecedented and never-ending recession.

The number of missing jobs is calculated based on the employment workforce of January 2000 when many quality jobs were available and the unemployment rate was 4.04%.  The workforce then was 67.49% of the total non-institutional civilian working age population.  The number of missing jobs in July 2012 is slightly lower than it was in July 2011 by 256,000 jobs, but it is higher by 696,000 jobs than it was in the miserable month of July 2010!  In two years of supposed recovery the number of missing jobs has actually increased by almost 700,000.  This is not a real recovery.  It is all smoke and mirrors.  The percentage of missing jobs compared to those wanted went up from 12.74% in June to 12.86% in July.

Biomedical and diagnostics companies such as Medtronic, Boston Scientific, Stryker, Covidien, Abbot Labs, Qiagen, Invacare, GE, SurModics, WorldHeart Corp., the Cordis Div. of Johnson & Johnson, C. R. Bard, BioMerieux, Celera, Cardo Medical, Resetta Genomics, and Care Fusion are all laying off employees, many citing the 2.3% tax on all revenues, not profits, from biomedical devices and on clinical testing in ObamaCare, or more accurately, ObamaUncaringTax.

Defense companies are doing the same in anticipation of the large cut-backs in defense spending brought on by the sequestering of defense funds as the Democrat Senate has failed to produce a budget in the entire presidency of Obama, or over 1203 days or 3.3 years.  This budget is required by law for very good reasons, but this Senate is lawless.  A recent study by George Mason University scholars calculates that the sequester cut-backs in military equipment purchases and R&D will result in the loss of about 1 million jobs.  Because the reduction in funds begins on 2 January 2013 and the WARN Act requires companies making large layoffs to give employees 60 days notice, these reductions will substantially have to occur by 3 November 2012.  Identifying the victims and processing such large numbers of lay-offs takes a massive amount of management time and hurts productivity.  The best way to handle such a process is to begin paring employees early, which many of these companies have been and continue to do.  Most of these cuts have nonetheless not yet been announced or made.

The Obama and EPA war on fossil fuels also is killing jobs.  Coal mines are closing and coal-fired electric power plants are closing.  Some railroad jobs will be lost as a result.  Because electricity costs are going up substantially as a result of losing low-cost coal-fired power plants and the mandates for very expensive wind and solar power, many businesses have higher costs and cannot hire added employees or are losing those they had.  The Obama restrictions on offshore and federal lands drilling and exploration for oil have caused many potential jobs to be lost in those activities.  America has an incredible portion of the world supply of coal, oil, and natural gas.  Feeder and long-distance oil pipelines have also not been built, which would have provided many jobs.  Refinery expansions and new refineries are badly needed, but regulations make such investments very hard to make.  This is another lost opportunity and results in higher fuel costs for transportation and higher plastic costs as well.  These higher costs inhibit the growth of many companies and add to reductions in consumer disposable income.  This senseless Obama vendetta has cost Americans many, many jobs.

Good government does not steal so much money and other resources from the productive private sector.  Good government is minimal government and serves only to protect the sovereign rights of the individual to life, liberty, property, the ownership of one's own mind, body, and labor, and the pursuit of happiness.  Such legitimate government makes way so that a robust private sector can produce a cornucopia of jobs, products, services, and ideas.  The illegitimate Obama government is greatly inhibiting the private sector and preventing the private sector from generating this abundance of wealth.  The role of government in producing jobs is simply to get out of the way.  That is a fact the Democrat Socialists will never understand.  If you want jobs and a healthy economy, this Obama administration and this Democrat Senate must be dismantled as a result of the November election.

The Missing Jobs in June 2012 are Unchanged from June 2010

This is the monthly update on the real unemployment situation in the USA based on the Bureau of Labor Statistics June 2012 Household Survey Jobs Data.  The data I will use will not be seasonally adjusted, so we will need to compare June of this year with the unemployment of June 2010 and June 2011 to see if any jobs recovery has occurred.  We will also calculate the number of missing jobs based upon the percentage of the jobs wanted in January 2000 relative to the working age civilian population available for work.  This excludes people in jail or in institutions for those in ill health.

The recent history of missing jobs is given in the following chart:

The number of missing jobs in June 2012 is slightly lower than the number of missing jobs in June 2011, but it is slightly higher than the number of missing jobs in June 2010.  Just as with every other month so far this year, if we compare the number of missing jobs to the same month a year and two years earlier, we find that essentially nothing has changed.

In contrast, the usual unemployment rate of June 2010 was 9.62%.  It fell to 9.32% by June 2011 and still further to the June 2012 rate of 8.43%.  But, this number means little due to the ever-increasing number of discouraged job seekers.  The number of the reported unemployed fell from June 2010 to June 2011 and again to June 2012.  The number of people employed also grew from June to June to June in that time.  However, the population of working age civilians also grew, so that the 12.80% of missing jobs in June 2010 had actually increased by June 2011 to 13.30%, before falling in June 2012 to almost the same percentage as in June 2010 at 12.74%.  A 0.06% decrease in the number of missing jobs in the last two years is no job recovery at all.  This has been the story consistently for the last two and half years.

The policies of the Obama administration are so wrongheaded that they have done great damage to the private sector economy and kept companies from hiring.  Government can do little to effectively increase hiring, but it is excellently capable of destroying jobs and keeping new jobs from being created.  Obama and his Democratic Socialist Party leadership have been working overtime finding ways to make the future ever more uncertain for business and in making labor so expensive that business cannot afford to hire.

John C. Goodman, CEO of the National Center for Policy Analysis, recently testified in the House of Representatives that ObamaUncaringTax will increase the cost of an employee by $6/hour.  The EPA is causing sizable increases in our electricity costs and a decrease in electricity reliability, which will cause great harm to many businesses and will reduce the money individuals can spend on other goods and services.  Many state governments are contributing to this problem with their mandates that green energy replace fossil fuels in the electricity supply of their state.  Despite a huge supply of oil and gas in the United States, the Obama administration has done everything it can to prevent the development of new fields on federal land and offshore.  The Dodd-Frank law has created great uncertainty and it has kept financial institutions from loaning to small businesses.  Obama and his union henchmen have interfered with employer-employee relations to the detriment of business.  The looming taxes of the ObamaUncaringTax will take a huge toll, which include a tax surcharge on individuals with higher incomes and on corporations, in addition to the penalty taxes.  This punitive taxation of higher income individuals is not enough for Obama and he wants to eliminate their low percentage decrease part of the Bush tax cuts.  All this is happening in the face of the start of the Baby Boomer retirements and the continued collapse of the housing market.

Of course business is not hiring enough people to get Americans back to work with a jobs recovery to this never-ending recession.  With Obama destroying the business climate, nothing will change and nothing will change Obama.  He is a dyed-in-the-wool socialist.  He is fundamentally anti-business, with the exception of those who generously support his campaign fund.  Even then many of those companies have found him unbelievably treacherous.  The only hope for our economy and for Americans who want to be able to earn a living is the replacement of Obama with Romney.

Obama Kills Jobs and Resuscitates the Great Socialist Recession

Let us start off with a chart showing the number of jobs missing from our economy since January 2000 in thousands of jobs.  The number of missing jobs in January 2000 was equal to the number of unemployed people then who were looking for jobs or in some cases were simply taking some time off between jobs.  Jobs were plentiful then and had been for several years, so unemployment was only 4.0%.  Because of the boom and bust nature of the economy since then due to the Federal Reserve setting very low interest rates, the deficits run by our governments, increasing regulations and taxes, added energy costs due to drilling prohibitions, recent added uncertainty caused by ObamaCare and Dodd-Frank financial reform, and considerable class warfare and anti-business rhetoric, the number of missing jobs has increased greatly in the course of the last 11 years.

The number of missing jobs is calculated assuming that the same percentage of Americans would work today as did in January 2000 if good jobs were available.  The high tech bubble that burst in 2001 and 2002 had already created a situation with about 5 million more missing jobs than we had had at the beginning of the century.  In December 2007, the United States had not yet been much affected by the recession due to a sharp increase in the price of oil that was already hurting most other countries of the world.  But in 2008, companies began laying off employees and stopped hiring new employees.  This never-ending Great Socialist Recession was underway.

Since Obama occupied the White House, there has been no substantial or sustained return to normalcy.  The number of missing jobs for the last four months has been almost constant.  There was actually a small increase in the number of missing jobs in August, though the statistics are not really good enough to consider that a real effect.  What is real is that over the long term now, there has been no improvement.  This is not surprising since almost every action the Federal Government and the Federal Reserve have taken was effective in killing jobs, not in creating them.  Jobs are conserved in big businesses and many, many jobs are created by small businesses when the government does little to hurt their businesses.  The Federal Government and many state governments have worked very hard to create very tough business conditions and much uncertainty when American business already faced a world largely in recession and stiff competition from abroad.

Obama's socialist viewpoint, his servitude to labor unions, and his academic economic advisers with their belief in Keynesian economic theory, led him and the Democrats down a very wrongheaded path.  America is in misery because of this wrongheaded understanding of the economy and business by our ever more controlling central planners in Washington.  The private sector and Capitalist free market can do much better.

Everything in the Democrat Economic Central Planning Arsenal is a Dud

The government told us the GDP growth rate in the first quarter was 1.8%, which is not a healthy growth rate at any time and is especially weak if an economy is recovering from a recession.  In May, the government increased that reported first quarter growth rate to 1.9%.  This was still not good, but it seemed to leave the door open to optimism that while recovery was slower than in other recessions, it would occur.  Then, the bottom fell out.  The first quarter GDP growth was revised downward to 0.4% and the second quarter GDP growth was said to be an anemic 1.3%, which has just been revised down to 1.0%.

Jobs growth is not keeping up with the growth in population.  The annual Consumer Price Index (CPI) stands at 3.6% and is running much higher in the last half year.  The average American worker workweek decreased by 0.1 hours and earnings fell by $0.03, which is no way to keep up with the inflation.  Labor productivity has very unusually been falling lately as well.  These factors bode ill for further hiring.

The rest of the world economy is not in good shape either, so there is no chance that exports will do much to change the bleak picture of the American economy.  The Purchasing Managers' Index (PMI), a measure of business purchasing activity, fell to a two-year low in August to 49.0.  Numbers below 50.0 mean contraction of business activity is going on.  Among the European countries with reduced activity are Great Britain, France, Spain, Italy, Ireland, and Greece.  The positive PMI's of Germany, Sweden, and Switzerland dropped.  The PMI of Japan is at a 3-month low and Taiwan's PMI is very negative at 45.2, its lowest value since January 2009.  Canada's GDP contracted, largely due to a 2.1% drop in exports.  The leading retailer in Australia expects falling sales.  China has a PMI on the edge of contraction and its exports to the U.S. have fallen.  The world economy is staggering.

In the U.S., the favorite Democrat central planning tools of stimulus spending and quantitative easing, or creating money from thin air, have not worked.  What a surprise!  Despite the GDP growth of the first half of the year being only 0.7%, the White House is telling us that GDP growth for the year will be 1.7%.  Wow, what a howler that is!  This means they are predicting growth in the second half of this year at an annual rate of 2.7%.  I suppose they think that growth will occur because businessmen and consumers are trusting that Obama's speech on his economic recovery plans this week will solve all of our problems!  For that to be so, all Americans would have to regress to the point that they believed that he could stop the oceans from rising and cure all of the diseases of the world, as many did when they first voted for him.  I think many even of those favorable voters have learned something since!  Even if that were the case, that growth which has not been evident through August, would have to occur entirely in the last 4 months of the year.

Let us examine a few issues with the stimulus approach loved by socialists.  The CBO, not really a very reliable source, recently released a report saying that the $787 billion American Reinvestment and Recovery Act has really cost us a $825 billion increase in debt.  They claim that they cannot figure out how many jobs were created by it, but it was somewhere between 1.4 million and an unbelievably generous 4 million.  I do not think they seriously try to estimate the number of jobs lost due to the bill.  So let us divide $825 billion by 1.4 million jobs and we find each job cost $589,300.  While some investment is needed to create meaningful jobs, that is enough money to pay someone the median income of $46,300 for 12.7 years!  I could readily provide several scientists with jobs with that amount of money, but the federal government is always incompetent and inefficient!  While I do not believe there is even a 1% chance that the stimulus bill created 4 million jobs, even if it did, each job would have cost $206,250 which would have allowed me to provide at least 1.5 long-term new jobs in my laboratory instead of a mythical job.

The CBO report claims that printing up $0.825 trillion in a $15 trillion economy added between 0.8% and 2.5% to the GDP in real, inflation-adjusted growth.  Printing this amount of money diluted the value of all money by at least 5.5% since 0.825/15 = 0.055.  One could argue that the dilution of money value is proportional to the smaller value of money in circulation, making the dilution much greater than this.  The act of printing that money did nothing to add to productivity so its effects upon production are transitory.  Worse yet, that monetary dilution devalued all property, including the already depressed housing market, and all commodities, such as oil, cotton, corn, wood, and metals.  Despite these huge negative effects, the CBO tells us that the expenditure increased the GDP by something in the range from 0.8% to a totally unbelievable 2.5%.  Well, this is another instance of the very bad track record of the CBO showing its lack of understanding of economics or its adherence to rules which do not correspond to reality.

The CBO then goes on to say that direct government purchases of goods and services have a multiplier effect of 1.0 to 2.5 for every dollar spent!  Well that is very interesting.  If that were so then the stimulus bill expenditure of $825 billion would have increased the GDP by between 5.5% and 13.75%!  Clearly, direct expenditures by government have no advantageous multiplier effect.  In fact, we can calculate the effect from their own numbers for the GDP growth they claim for the stimulus bill.  0.8/5.5 = 0.145 for the lower bound multiplier and the upper bound multiplier would be 2.5/5.5 = 0.45.  These calculated multipliers ranging from 0.14 to a clearly too high 0.45 are way below 1.0, which is more like what one expects from an incompetent and inefficient government with no real interest in human productivity.

Alan Reynolds, an unusually insightful economist, has written an excellent article entitled The Fed vs. the Recovery, which first appeared in the Wall Street Journal on 26 August 2011.  It is on the CATO Institute website here.  He says:

In demand-side theorizing, monetary stimulus means the Fed buys more bonds. The Treasury has certainly been selling a lot of bonds, and the Fed has been buying (monetizing) a huge share of those bonds. That helped push the broad M2 money supply up at a 6.8% rate over the past six months. Yet the only thing we have to show for all that stimulus over the past year has been rapid inflation of producer prices and a simultaneous slowdown in the growth of the private economy. Consumer price inflation also accelerated to 5.2% in the first quarter and 4.1% in the second, from just 1.4% in the third quarter of 2010.

He notes that industrial supplies and materials account for 34.5% of our imported goods so far this year and capital equipment and parts add another 23% of imports.  Because of the second quantitative easing (QE2) which began in November 2010 and ended in June of 2011, the value of the dollar fell about 15% relative to the Euro.  The Economist's commodity-price index went up 50.9% in a year in dollars, but 22.8% in Euros.  Our import prices rose by a 15.1% annual rate and our export prices rose by an annual 11.4% over the last three quarters under QE2.  These effects reduced the growth of real GDP.

Alan Reynolds notes that

The net effect was to reduce the profitability of manufacturing and distributing products in the United States, and therefore to shift such activities (and jobs) to other countries which were less handicapped by the dollar's weakness.

Fortunately for the S&P 500 companies, 46% for their sales came from other countries!  As a result, their operating earnings per share rose from $20.40 a year earlier to $24.86 by June 2011.  Thanks to our government's policy of printing money, this did most Americans little good.

One of the commodities whose price was driven up by QE2 with important and devastating consequences was that of oil.  As I have pointed out many times (thanks to reading Alan Reynolds), every postwar recession except that of 1960 has been triggered by a sudden increase in the price of oil. From August 2007 to July 2008 we had such an oil price spike as the value of the dollar fell and oil prices doubled.  We had another large oil price increase due to the dollar losing value from late August 2010 when Bernanke announced QE2 until the end of April 2011.  The price of oil increased from $72.91 to $112.30, an increase of 54%.  Just the price of oil increasing suddenly has a very negative impact on our economy.  This is aggravated by our refusal to allow reasonable increases in domestic production, which makes us more vulnerable to fluctuations in the value of the dollar relative to other currencies.

Both the Stimulus and the Quantitative Easing efforts have depressed the growth of the GDP and resulted in giving companies every incentive to hire aboard and every disincentive for hiring at home.  Meanwhile, the regulatory, tax, anti-business, promotion of labor cost increases, and anti-energy policies and rhetoric of the Obama cabal has been added to the wrongheaded policies of the Federal Reserve to put us into a never-ending recession.

Actions Speak Louder than Words: Obama Hates Small Business

For each of the last five months, the National Federation of Independent Businesses (NFIB) has found that the business optimism of small business owners has fallen.  With First Quarter 2011 GDP growth dropped to 0.4% and Second Quarter GDP growth presently said to be 1.3%, some earlier optimism that this never-ending Great Socialist Recession was showing some signs of recovery has vanished.  Indeed, it is not even clear that if price inflation were taken into account properly that the so-called growth of the first two quarters of this year was not really a contraction of the economy.  We may very well actually have had the second dip of this recession already.  The Manufacturing Index has also been very disappointing.  Real estate values show no sign of recovery and consumer spending is still limping along.

Every time Obama and the Democrats push to provide extended unemployment benefits to the unemployed, the states have to continue using much higher than normal unemployment tax rates on the employees of businesses.  My company's rate in 2010 and 2011 is 7.33 times higher than it was 2008, despite our never having let an employee go who was eligible to collect unemployment insurance benefits.  This is not an incentive to small businesses to hire more employees and makes it harder to keep the employees they have.  Being forced to let a good employee go is definitely an optimism killer when you are running a small business.

Small businesses are also hit by the increased costs and bureaucracy they will have to expect with ObamaCare.  The Dodd-Frank financial industry reform bill has especially cut them off from the big lenders with assets in excess of $100 billion.  The increased regulatory burdens imposed by Obama's EPA, FDA, FTC, DOD, FDIC, Consumer Protection Agency, the NLRB, and the restrictions on oil and gas drilling have been hardest on small businesses who cannot afford legions of lawyers to deal with the government bureaucracy.  When the FDA or DOD require a business to become ISO-certified as proof of quality controls, that cost is proportionally much greater on a small business than on a larger business.  This is a very real discrimination against small businesses and often has only cosmetic effects on real quality controls since the business owner and upper management in a small firm are much more likely to be on top of quality issues than the corresponding management is in a big business.  New FDA oversight of small food retailers and producers is another major cost escalator for many small businesses.  Since few people were dying of food poisoning, there is no significant benefit to this new Obama cost.

Falling demand has been the biggest problem for small businesses which are less likely to participate heavily in the export markets as the large multinational companies do.  There are better opportunities for profits and sales abroad in many areas than here in the U.S., thanks to the Obama administration economy-wrecking policies.  Small business owners are also very worried about the uncertainties caused by excessive government spending and the rapid increase in the national debt.  The more spending government does, the more it interferes with business activity.  Since 2001, the GDP has grown by 46%, but the national debt has grown by 146%!  The Federal Reserve bought about three-quarters of U.S. Treasury Bonds in 2009 and 2010, thereby increasing its balance sheet from $896 billion in August 2007 at the start of the housing bubble collapse to $2.9 trillion now.  This is clearly not sustainable, yet there is no end in sight to this method of "covering" the absurd spending of the government.  The excessive spending and debt both cause pressure of increased taxes or inflation in the near future.  Business taxes are already much too high.

While only about 8% of small businesses name access to credit as their primary problem in NFIB surveys, it is clear that the credit needs of many small businesses are not being met.  Interest rates were increased on many lines of credit, business loans, and business credit cards.  40% of small businesses attempting to borrow in 2009 were able to meet their credit needs, 10% had most of their needs met, 21% had some, and 23% had none of their credit needs met.  With the gathering worries of satisfying the Dodd-Frank finance reform bill, this situation is becoming worse as this recession drags on and on and on.  Small businesses commonly do not have the resources to last through multiple years of recession.  Banks are especially refusing to lend money to fill in cash flow problems.

Small business owners generally own real estate.  In the NFIB 2009 study, 95% had real estate.  The fact that most real estate has lost considerable value has deprived many small business owners of the collateral they would commonly use to secure credit.  13% of small business owners had at least one property worth less than what they owed on it.  The loss of property values has left many small businesses much more vulnerable.

Into this sorry picture of woes for small businesses, the Obama administration FDIC has been squeezing banks to loan less money to small businesses, which it regards as less credit worthy as a group.  On that they may be right, but as is the rule with government, the assessment is a one-size-fits-all assessment.  Main Street Bank of Kingwood, Texas specializes in small business loans.  Main Street Bank has a $175 million loan portfolio and 90% of it goes to small businesses.  Most of these businesses have annual revenue less than $1 million.  The average loan size is $100,000.  Main Street had a profit of $1 million in the Second Quarter and wrote off 1.25% of its loans as bad.  The failure rate of loans in the FDIC insured banks in the First Quarter was 1.82%.  The FDIC has not released the bad loan rate for the Second Quarter yet.  Government is slow.

Despite the success of Main Street Bank in its small business loan strategy, the FDIC slapped it in July 2010 with an order to increase its capital and reduce the proportion of its small business loans from 90% to 25%.  The bank was also ordered to hire another bank executive.  It had to sell a business and shrink its loan portfolio to meet the increased capitalization requirement.  This increase in capitalization was a large one, from 9.5% in June 2010 to 17.3% in June 2011.  As a result of this FDIC interference in their business, Main Street Bank is working hard to turn in its bank charter.  A new company is being set up, Ascentium Capital, which will have backing from a private group of investors and will no longer take customer deposits.  This business will not be regulated and will be able to continue to specialize in small business loans.  They plan to increase the loan portfolio to $500 million.

The reduction from 90% of Main Street Bank loans to 25% for small businesses, removed $114 million of small business credit from the market.  Now imagine this kind of thing happening all over the country as the FDIC goes from bank to bank and prescribes lowered small business loan exposure.  The impact on small business credit will be huge.  This is very important, because a large fraction of American workers are employed by small firms and much innovation occurs in these companies.  A lack of access to credit during an extended recession makes these myriad small businesses more likely to fail.  The Obama administration policy is clearly to subsidize and bailout big businesses, but to slash and plunder small businesses.

Interestingly enough, the Small Business Administration has been repeatedly cited for guaranteeing lenders loans at 85% of the loan for which the lenders are considered to be at high risk in 80% of SBA 7(a) loans.  Their loan failures run many times higher than those of Main Street Bank!  While their loans go to only 0.2% of small businesses, they have an outlandish failure rate of 19.4%.  Perhaps the Obama crew should be more concerned with controlling this loan failure rate than that of a private bank which knows its business very well.

That tendency to plunder small business could not be made more clear than by Obama's constant effort to raise taxes on those earning more than something between $200,000 and $250,000 a year.  His efforts to widen the death tax is another indicator of his evil intentions with respect to small businesses.  It is politically much easier to plunder small businesses than it is to tackle big businesses with their many savvy lawyers and lobbyists.  It is also easier to over-regulate small businesses.  Socialists do not like business owners and managers.  They are equated with labor exploiters, no matter how many goods and services they produce for free consumers and no matter how many jobs they may provide.  Obama and his crew of insiders are nothing if they are not true socialists.  Small businesses are made to pay a heavy price as a result of their present power.